Whether “the exercise of the right to rescission or the rescission of a contract due to unavoidable reasons” under Article 45-2(2)5 of the former Framework Act on National Taxes and Article 25-2(2)2 of the former Enforcement Decree of the Framework Act on National Taxes becomes grounds for filing a subsequent claim for rectification even to corporate tax (affirmative in principle), and where the rescission of a contract cannot serve as grounds for

Article 45-2(2)5 of the former Framework Act on National Taxes (Amended by Act No. 12848, Dec. 23, 2014); Article 25-2 subparag. 2 of the former Enforcement Decree of the Framework Act on National Taxes (Amended by Presidential Decree No. 26066, Feb. 3, 2015)

Supreme Court Decision 2012Du10611 Decided March 13, 2014 (Gong2014Sang, 857) Supreme Court Decision 2016Du60201 Decided September 21, 2017 (Gong2017Ha, 2008)

Korea Railroad Corporation (Law Firm LLC et al., Counsel for the defendant-appellant)

Daejeon Tax Office (Law Firm Aion et al., Counsel for the plaintiff-appellant)

Daejeon High Court Decision 2015Nu10603 decided October 13, 2016

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. As to the second ground for appeal

The lower court, on the grounds indicated in its reasoning, determined that each of the instant land sales contracts was lawfully rescinded.

Examining the relevant legal principles and records, the lower court did not err in its judgment by failing to exhaust all necessary deliberations or by misapprehending the legal doctrine on the lawfulness of rescission, contrary to what is alleged in the grounds of appeal.

2. Regarding ground of appeal No. 1

In light of the legislative purport of Article 45-2(2) of the former Framework Act on National Taxes (amended by Act No. 12848, Dec. 23, 2014; hereinafter the same), the language and text of Article 25-2 subparag. 2 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 2606, Feb. 3, 2015; hereinafter the same), the lower court determined that insofar as it is proved that the contract was rescinded by the exercise of the right to rescission, the lower court constitutes grounds for filing a subsequent claim for rectification even if it was not confirmed by a judgment on the lawsuit.

In light of the relevant legal principles and records, the lower court did not err by misapprehending the legal doctrine regarding the grounds and requirements for filing a subsequent claim for rectification, contrary to what is alleged in the grounds of appeal

3. As to the third ground for appeal

Article 45-2 (2) 5 of the former Framework Act on National Taxes and Article 25-2 (2) 2 of the former Enforcement Decree of the Framework Act on National Taxes, upon receipt of the delegation thereof, refer to cases where a contract related to the effect of transaction, act, etc., which served as the basis for calculating the tax base and the amount of tax, is rescinded by exercise of the right of rescission or where the contract is cancelled or cancelled due to unavoidable reasons that occurred after the formation of the relevant contract

In addition, corporate tax also constitutes a ground for ex post facto request for correction under Article 45-2 (2) 5 of the former Framework Act on National Taxes and Article 25-2 (2) 2 of the former Enforcement Decree of the Framework Act on National Taxes, “ex post facto request for correction of the contract due to the exercise of the right to cancel or the unavoidable reasons for the cancellation of the contract: Provided, That in special circumstances where the Corporate Tax Act or relevant regulations stipulate the income not realized due to the cancellation of the contract separately as the grounds for deducting the income amount for the business year to which the date of cancellation belongs, or where the taxpayer has filed corporate tax return in the manner of deducting the income amount for the business year to which the date of cancellation belongs in accordance with corporate accounting standards or practices, such cancellation of the contract cannot affect the tax liability which was initially established, and thus, cannot be the ground for ex post request for correction (see, e.g., Supreme Court Decision 2012Du106

For the reasons indicated in its reasoning, the lower court determined that there were no special circumstances where it is impossible to serve as the ground for filing a subsequent claim for rectification after the cancellation of each land sales contract.

In light of the relevant legal principles and records, the lower court did not err by misapprehending the legal principles on the time when the profits and losses accrue, the principle of taxation for a fixed period, the corporate accounting application, and the grounds for filing a request for ex post facto correction, etc.

4. As to the fourth ground for appeal

In light of the circumstances stated in its reasoning, the lower court determined that the registration of transfer of ownership in the name of the Plaintiff on each of the instant land constitutes the registration of transfer of ownership following the cancellation of the sales contract

Examining the relevant legal principles and records, the lower court did not err in its judgment by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the legal doctrine on the grounds for restoring ownership of each of the instant land, without exhaust all necessary deliberations, contrary to what is alleged

5. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Jae-hyung (Presiding Justice)